Denmark Investigates Billion Dollar Tax Swindle

Tax authorities in Denmark have admitted paying out almost a billion dollars in fake tax refunds to people living outside the country according to the state prosecutor’s office.

The scam involved claims for repayments for tax deducted from stock dividends, which investors living outside Denmark can claim as they are exempt from the standard 27 percent tax.

"Our preliminary studies show that a large network <…> abroad apparently has tried to get dividend tax paid back on the basis of fictitious shareholdings and falsified documentation," the head of the tax authority, Jesper Ronnow Simonsen, said in a statement.

The investigation covers more than 2,000 repayments from 2012 to 2015 that amounted to US$954 million, the State Prosecutor for Serious Economic and International Crime said.

Under double taxation agreements, foreign companies based abroad are entitled to a refund of part or all of the Danish tax if they have paid tax on the dividend in their country of domicile.

Falsified Documents

The criminals filled in a simple form on the tax authority’s website and then claimed refunds for taxes paid on stock revenues from Danish companies held by foreign companies.

The investigation found that "a large network of companies abroad have apparently applied to have their dividend taxes refunded for fictional share holdings, based on falsified documents".

Torben Bagge, a tax expert with the law firm Tommy V. Christiansen, told the newspaper Ekstra Bladet: "The probability that they get the money back is very small,"

With a total tax burden amounting to 51.5 percent of gross domestic product, Danes carry the highest tax burden in the world, according to the Organisation for Economic Cooperation and Development.